THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 271/2016
In the matter between:
STEYN LYELL MAEYANE ATTORNEYS
APPELLANT
And
JOHAN OELOFSE
Neutral citation:
RESPONDENT
Steyn Lyell Maeyane Attorneys v Oelofse (271/2016) [2017]
ZASCA 18 (23 March 2017)
Coram:
Leach, Tshiqi, Wallis and Mbha JJA and Fourie AJA
Heard:
9 March 2017
Delivered:
23 March 2017
Summary:
Written undertaking given by a firm of practising attorneys : whether it
constituted an unconditional guarantee to make payment itself : having regard to the
factual matrix providing the context in which it was given, the undertaking did not
constitute a personal guarantee : evidence pertaining to the parties’ intentions
regarding the undertaking inadmissible.
2
________________________________________________________________
ORDER
_______________________________________________________________
On appeal from: The High Court, Gauteng Division, Pretoria (Legodi J, MolopaSethosa and Tuchten JJ concurring, sitting as court of appeal):
1 The appeal succeeds with costs.
2 The order of the full court is set aside and substituted with an order in the following
terms:
‘The appeal is dismissed with costs.’
_________________________________________________________________
JUDGMENT
_________________________________________________________________
Fourie AJA (Leach, Tshiqi, Wallis and Mbha JJA concurring):
[1]
The main issue in this appeal is whether a written undertaking (the
undertaking) given by the appellant, a firm of practising attorneys, constituted an
unconditional guarantee by the appellant itself to pay an amount of R1 million to the
respondent. The respondent contended that it did and instituted action against the
appellant in the High Court, Gauteng Division, Pretoria, for the payment of R1
million, as well as damages in an amount of R200 000, allegedly suffered as a
consequence of the appellant’s failure to honour the undertaking. The appellant
opposed the action.
[2]
In the event, the trial proceeded before Prinsloo J who dismissed both claims
with costs. The trial judge, however, granted the respondent leave to appeal to the
full court of the Gauteng Division, Pretoria. The full court (per Legodi J, MolopaSethosa and Tuchten JJ concurring) upheld the appeal and granted both claims with
costs. The present appeal is with the special leave of this court.
[3]
The undertaking was given by the appellant in the following terms in a letter
dated 1 April 2008, addressed to Messrs Gary Janks Attorneys:
‘RE: PROFIT SHARING: DRAKENSBERG GARDENS DEVELOPMENT
OUR CLIENT: ABRINA 2537 (PTY) LIMITED
3
This letter serves as a guarantee for funding required by Dr Johan Oelofse to assist in the
purchase of Wiesenhof Business Park, Heidelberg in the name of Plenty Properties.
On instructions of our client, ABRINA 2537 (PTY) LIMITED, we confirm that Dr Johan
Oelofse has a 10 % interest in the abovementioned development, which profit sharing will
take place on or before 11th April 2008.
The 10 % shareholding amounts to R1,000,000 (one million Rand), which remuneration will
be paid to him as agreed.
Please provide us with your banking account details in order for us to make the payment
directly into your account for the sum of R1,000,000.’
[4]
The undertaking has to be construed against the backdrop of the factual
matrix providing the context in, and the purpose for which, it was given. As
emphasised in Natal Joint Municipal Pension Fund v Endumeni Municipality [2012]
ZASCA 13; 2012 (4) SA 593 (SCA) para 18:
‘The “inevitable point of departure is the language of the provision itself”, read in context and
having regard to the purpose of the provision and the background to the preparation and
production of the document.’ 1
[5]
In Frans Jacobus Kruger h/a Kruger Attorneys v Property Lawyer Services
(Edms) Bpk [2011] ZASCA 80 para 8, this court too was concerned with the
interpretation of a written undertaking given by a firm of attorneys. The following was
said regarding the interpretation of the undertaking:
‘The letter of undertaking was issued pursuant to the bridging loan made by the respondent
to Mr Bell and the trust. It must be construed in that context, the factual matrix in which the
parties operated, so as to give it a commercially sensible meaning. It is clear from the
wording of the undertaking that the appellant undertook to pay the amounts stipulated
against registration of transfer of the properties . . . The real question, however, is not
whether the appellant undertook to pay but what the content of this undertaking was.’
And further at para 10:
‘The undertaking is not to pay “regardless” but to effect payment from the receipt of the
proceeds of the sales. Nor was it envisaged that the proceeds would vest in the appellant: by
virtue of the “cession” the proceeds in the agreed amount had to be paid to the respondent.
It would have been absurd for the appellant to have given an unconditional, independent
1
See also: Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk 2014 (2)
SA 494 (SCA); [2013] ZASCA 176 para 12; Dexgroup (Pty) Ltd v Trustco Group International (Pty) Ltd
[2014] 1 All SA 375 (SCA); 2013 (6) SA 520 (SCA); [2013] ZASCA 120 paras 10-17; Kingswood Golf
Estate (Pty) Ltd v Witts-Hewinson & another [2014] 2 All SA 35 (SCA); [2013] ZASCA 187 para 19.
4
undertaking in these circumstances . . . Seen in this context, the undertaking amounts to no
more than an undertaking to make payment from the proceeds of the sales.’
[6]
It appears from our jurisprudence that the word ‘guarantee’ is capable of
bearing different meanings depending upon the context in which it is used. In List v
Jungers 1979 (3) SA 106 (A) at 118D the following was said:
‘[It is] an unrewarding and misleading exercise to seize on one word in a document,
determine its more usual or ordinary meaning, and then, having done so, to seek to interpret
the document in the light of the meaning so ascribed to that word.’
And at 118E-G the court emphasized that the context in which the word is used is of
prime importance and referred with approval to the following dictum in Hermes Ship
Chandlers (Pty) Ltd v Caltex Oil SA Ltd 1973 (3) SA 263 (D) at 267:
‘The passages from the various judgments I have mentioned deal with popular or ordinary
meanings of the word ‘guarantee’, but it seems to me that they demonstrate only that the
word is capable of bearing different meanings depending upon the context in which it is
used. It seems to me also that when the meaning of a word in a particular document is being
considered, it is undesirable to commence the enquiry on the basis that any one of its
possible meanings predominates, and that the proper approach to the question is to be alive
to the various meanings which it can bear and by a consideration of the context in which it is
used (together with such other circumstances as may be permissible) to decide which
meaning must be attributed to it in that context.’
[7]
In the instant matter the relevant factual matrix is, fortunately, largely common
cause or at least not seriously disputed. It may be succinctly summarised as follows:
Abrina 2537 (Pty) Ltd (Abrina) was involved in a development in Vanderbijlpark,
known as Drakensberg Gardens. In March 2007, the respondent advanced financing
to Abrina which, it was agreed, would entitle him to ten per cent of the net profit to be
made upon the completion of the development. It was anticipated that the
respondent’s share of the profit would be approximately R1.2 million to R1.5 million
and the estimated completion date was January/February 2008.
[8]
On 26 February 2008, the respondent, acting on behalf of a special purpose
vehicle, Plenty Properties (Pty) Ltd (Plenty Properties), concluded an agreement with
one Wiese in terms of which the Wiesenhof Business Park in Heidelberg, Gauteng,
was sold to Plenty Properties for R3.265 million. The respondent depended on his
5
profit sharing in the Drakensberg Gardens development to finance part of the
purchase consideration due to Wiese. A deposit of R200 000 had to be paid on 26
February 2008, but as the respondent had not yet received his share of the profit in
the Drakensberg Gardens development, his father, a co-shareholder in Plenty
Properties, advanced the deposit which was paid to Wiese on behalf of Plenty
Properties. In terms of this agreement of sale, the deposit would be forfeited to
Wiese as rouwkoop in the event of the balance of the purchase price not being paid
timeously resulting in the cancellation of the agreement. The balance of the
purchase price was payable in cash on registration of transfer of the property, and
had to be secured by Plenty Properties by means of approved guarantees on or
before 31 March 2008.
[9]
Due to Abrina’s failure to complete the Drakensberg Gardens development
timeously, payment of the respondent’s share of the profit in the development was
not forthcoming. This resulted in the respondent negotiating an extension for the
provision of guarantees by Plenty Properties to Wiese, until 4 April 2008. The
respondent, however, had by then lost faith in Abrina and insisted that he be
provided with a written undertaking as to the payment of the profit share due to him
by Abrina. This, the respondent believed, would provide him with a form of guarantee
that would satisfy Wiese as to the ability of Plenty Properties to honour its obligations
in terms of the Wiesenhof agreement of sale.
[10]
The appellant, acting on the instructions of Abrina, then provided the
respondent with the following document on 1 April 2008:
‘RE: PROFIT SHARING: DRAKENSBERG GARDENS DEVELOPMENT
OUR CLIENT: ABRINA 2537 (PTY) LIMITED
On instruction of our client, ABRINA 2537 (PTY) LIMITED, we confirm that Dr Johan Oelofse
has a 10% interest in the abovementioned development, which profit sharing will take place
on or before 11th April 2008.
The 10% interest amounts to approximately R1 000 000 (one million rand), which
remuneration will be paid to him as agreed.’
[11]
The respondent was not satisfied with the contents of this document, and after
consulting his attorney, he suggested certain amendments. In response thereto, the
6
appellant, on the same day, provided the undertaking addressed to Gary Janks, the
attorney acting on behalf of Wiese.
[12]
As appears from the undertaking, it was anticipated that the profit sharing
resulting from the completion of the Drakensberg Gardens development, would take
place on or before 11 April 2008. However, Abrina failed to complete the
development during April 2008. In fact, it was only completed during April 2009 when
the nett profit made from the project was finally determined in the amount of
R6 022 608. Abrina then paid an amount of R600 000 to the respondent as part of
his share of the profit.
[13]
This delay resulted in Plenty Properties being unable to timeously furnish the
guarantees due in terms of the Wiesenhof sale agreement. A further extension for
the delivery of the guarantees was negotiated, and on 1 May 2008 the respondent
requested the appellant to honour the undertaking by paying the amount of R1
million to Mr Janks. The appellant advised the respondent that the funds for the profit
sharing had not yet been made available to it by Abrina, and therefore it was not able
to transfer any funds to Mr Janks. This resulted in Wiese cancelling the Wiesenhof
sale agreement on 5 June 2008, whilst retaining Plenty Properties’ deposit of
R200 000 as rouwkoop.
[14]
Meanwhile, on 21 May 2008, the appellant, on the instructions of Abrina,
withdrew the undertaking. The respondent took the view that, in terms of the
undertaking, the appellant was itself liable to him for payment of the sum of
R1 million and instituted action for the payment thereof. I should add that, due to the
subsequent payment of R600 000 made by Abrina, the respondent reduced its claim
to R400 000, although no formal amendment of its pleadings was effected. In
addition, damages of R200 000 were claimed by the respondent consequent upon
the forfeiture of the deposit of R200 000 in terms of the Wiesenhof sale agreement.
[15]
When the wording of the undertaking is considered against the backdrop of
this factual matrix, the following is immediately apparent:
(a) It is addressed to Mr Gary Janks, the attorney attending to the Wiesenhof
transaction.
7
(b) The preamble declares that the undertaking concerns the profit sharing in the
Drakensberg Gardens development, and that Abrina is the appellant’s client.
(c) It confirms that the undertaking serves as a ‘guarantee’ for funding required by
the respondent to assist in the purchase of the Wiesenhof property.
(d) It confirms that as per the instructions of the appellant’s client, Abrina, the
respondent has a ten per cent profit sharing interest in the Drakensberg Gardens
development, amounting to R1 million, which will be paid to him ‘as agreed’, on or
before 11 April 2008. It is common cause that the words ‘as agreed’ refer to the profit
sharing agreement concluded by Abrina and the respondent.
(e) Finally, it requests Mr Janks to provide his banking account details in order for
the appellant to make ‘the payment’ directly into such account. In context, ‘the
payment’ refers to the amount that the respondent is to be paid ‘as agreed’, ie in
terms of the profit sharing agreement concluded by Abrina and the respondent. In
terms thereof, the respondent’s share of the profit would be paid upon the
completion of the Drakensberg Gardens development.
[16]
It is clear from the plain wording of the undertaking that it does not constitute
an undertaking or guarantee by the appellant itself as principal debtor, to make
payment of the amount of R1 million to Mr Janks or the respondent. On the contrary,
the undertaking amounts to no more than a confirmation by the appellant on behalf
of its client, Abrina, of the terms of the profit sharing agreement between Abrina and
the respondent, namely that the respondent has a ten per cent interest in the
Drakensberg Gardens development, which will amount to R1 million and be paid to
him on or before 11 April 2008. The document certainly cannot be construed as an
undertaking or guarantee by the appellant to make payment of the sum of R1 million
to the respondent or Mr Janks, irrespective of whether or not profit sharing in
accordance with the agreement between the respondent and Abrina took place and
irrespective of whether it had been put in funds to make payment.
[17]
As recorded above, the profit sharing did not take place on or before 11 April
2008. In fact, it only took place upon the completion of the development in April
2009. It is further undisputed that, at the time when the undertaking was issued by
the appellant on 1 April 2008, it did not hold any funds in trust on behalf of Abrina
from which any payment could have been made to the respondent in terms of the
8
undertaking. It is therefore improbable in the extreme that the appellant would have
bound itself unconditionally to make payment of an amount of R1 million to the
respondent on or before 11 April 2008. No reason has been suggested why it would
have agreed to do so. In any event, that is simply not the content of the undertaking
given by the appellant.
[18]
In the course of her argument, counsel for the respondent placed reliance on
the evidence tendered by the respondent at the trial pertaining to his intention in
regard to the required undertaking. She also criticised the appellant for failing to
produce any witness to testify ‘as to the appellant’s intention in writing [the
undertaking]’. This evidence of the respondent was clearly inadmissible – as would
have been the case had the appellant tendered such evidence. It is trite that, in
construing a document which was intended to be the sole memorial of the
agreement between the parties, direct evidence by the parties of their intentions
before or at the time of the formation of the written contract is inadmissible. As
emphasised in Van Aardt v Galway [2011] ZASCA 201; 2012 (2) SA 312 (SCA) para
9, such evidence is also irrelevant and therefore inadmissible as ‘context’ in relation
to the interpretation of the written document. 2
[19]
For the above reasons, I conclude that the full court erred in finding that the
undertaking constituted an unconditional guarantee by the appellant. I should add
that the full court in any event erred in granting judgment against the appellant for
payment of the sum of R1 million, as the respondent had reduced this claim to
R400 000. Be that as it may, the claim ought to have failed and, as the second claim
for the payment of damages in an amount of R200 000 was dependent on the
validity of the claim based on the undertaking, it similarly ought to have been
dismissed.
[20]
Further, and in any event, I do not believe that the respondent had proved that
he had suffered any loss entitling him to claim damages from the appellant. As
recorded earlier, the sum of R200 000 forming the subject of this claim was paid by
his father on behalf of Plenty Properties. It was Plenty Properties, and not the
2 See also Coopers & Lybrand & others v Bryant 1995 (3) SA 761 (A) at 768D-E and KPMG
Chartered Accountants (SA) v Securefin Ltd & another 2009 (4) SA 399 (SCA) para 39.
9
respondent, that forfeited this amount when the Wiesenhof sale agreement was
cancelled. The respondent testified that he had undertaken to repay the amount of
R200 000 advanced by his father to Plenty Properties, but this was a matter between
him and his father, and the appellant could certainly not have foreseen that the
respondent would have suffered an indirect loss of this nature as a consequence of
the cancellation of the Wiesenhof sale agreement. It follows that the appeal against
the order of the full court should succeed.
[21]
In the result the following order is made:
1 The appeal succeeds with costs.
2 The order of the full court is set aside and substituted with an order in the following
terms:
‘The appeal is dismissed with costs.’
_____________________
P B Fourie
Acting Judge of Appeal
10
APPEARANCES:
Appellant:
J S Griessel
Instructed by:
Gildenhuys Malatji Inc., Pretoria
Honey Attorneys, Bloemfontein
Respondents:
I Joubert
Instructed by:
Van Zyl’s Inc., Centurion
Bezuidenhout Inc., Bloemfontein